Money
Issue No. 41 - June/July 2008
Plan to get value from SME sale
Less than half of Australian small business owners have a plan to realise the value they’ve built up in their businesses, according to a new report from Commonwealth Bank Local Business Banking.
The Commonwealth Bank/Investment Trends Local Business Owner Report shows only 47% of SME owners have an exit strategy, such as selling their business. Of those with an exit plan, 22% intend to close their doors and walk away.
More surprisingly, 60% of business owners planning to close their doors are still actively reinvesting profits back into their businesses. Half are also working more than 50 hours every week — 13 hours more than the national average of 36.9 hours. This problem is at its worst among business owners aged 60 or over, with one in four planning to close the business.
At the opposite end of the scale, two thirds of Generation Y owners have already made plans to sell their businesses outright.
CBA’s General Manager, Local Business Banking for South Central and Western Australia, Bernard Tanner says the alarming tendency of Baby Boomer business owners to ‘walk’ may have to do with how prepared
they are to invest in advice. Well structured businesses are better prepared for eventual sale and more
attractive purchases.
Owners who went straight into a family business or became business owners through success in a trade too often find themselves without options when the time comes to move on.
“Really all we can do is to advise the business owner and look at putting them in touch with someone who can help,”Bernard says.
Taking advice can smooth the path to sale, either to management or by generational change.
Skilled professionals in solo practice need to take steps to protect their “own best asset”.
“You need to prepare and document your knowledge so you can pass that on to someone willing to pay you for that valuable commodity,”Bernard says.
“The value of IP su...
